When Small Is Better

How Google's AdWords system is changing online advertising - Web advertising hasn't exactly been a growth industry of late, with customer apathy for obtrusive banners eating up click-through rates. Yet Web use is up—especially at search engines and portals. For instance, according to a study by Jupiter Media Metrix Google saw a jump in unique visitors per month during the second half of 2001. The number of unique visits increased from just under 12 million to over 22 million. So if traffic is good but click-throughs are down, then the question is how to advertise in a way that serves that market rather than alienating it.

This is a particularly thorny problem for Google, which has built its loyal customer base by delivering fast searches and relevant results unimpeded by banner ads or flashy graphics. While a strategy of building ever-more-intrusive ads to try to keep users clicking might work at some sites, Google believes it would drive users away.

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